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2 megatrends that continue to drive tech
Jean Park – November 20, 2019
"Even with a slowing economy, I see more growth ahead for the technology sector, driven by 2 megatrends: the ongoing emergence of cloud computing and the rollout of 5G wireless networks,” says Jean Park, manager of Fidelity® Growth Strategies Fund (FDEGX).
Companies continue to invest heavily in tech infrastructure that helps them do more business online, Park says, and many are moving that infrastructure to the cloud.
To take advantage of this trend, Park has not included the usual big names, Microsoft (MSFT), Amazon.com (AMZN), and Alphabet (GOOG), but instead has emphasized companies that she thinks are helping to drive the cloud-computing megatrend. These include CDW (CDW), EPAM Systems (EPAM), and Booz Allen Hamilton (BAH) —all meaningful fund positions at the end of September. She notes that each has generated positive free cash flow and traded at a reasonable valuation.
Turning to 5G wireless networks, Park and Fidelity's research team anticipate a multiyear rollout, likely beginning late in 2019.
One of the main beneficiaries of the build-out, she says, could be companies that rent towers used for current- and next-generation cellular service networks. The fund had direct exposure to this trend through major player SBA Communications (SBAC), a top holding as of September 30.
Park also believed 2 other companies in the fund could be well-positioned: Keysight Technologies (KEYS), a maker of electronics test and measurement equipment, and Fortinet (FTNT), which offers advanced security solutions to protect today's evolving networks.
Learn more about this manager and her fund
Jean Park is portfolio manager of Fidelity® Growth Strategies Fund, which held securities mentioned in this article on September 30, 2019. As of this date, EPAM Systems composed 0.94% of fund assets; Booz Allen Hamilton Holding composed 1.02% of fund assets; SBA Communications composed 1.90% of fund assets; Keysight Technologies composed 0.86% of fund assets; and Fortinet composed 0.98% of fund assets.
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